According to Denver Police, Williams was killed in an early morning shooting after someone with a gun pulled up alongside the white Hummer stretch limousine he and wide receiver Javon Walker were riding in and fired multiple shots.
Police say 16 people were in the stretched Hummer at the time of the shooting, including Williams and Walker. Authorities say Walker was not shot.
Police say the shooting happened near 11th Street and Speer Boulevard at 2:30 a.m. on Monday.
Some of the streets in the area were shut down during the investigation.
Authorities say they are searching for a white GM model car, either a Suburban or a Tahoe with dark tinted windows. Anyone with any information regarding the incident should call Denver Police.
Three people were shot and police say the limo was sprayed with bullets. At the scene, 9NEWS could see what appeared to be ten bullet holes in the limo.
Police say the three were taken to area hospitals where Williams was pronounced dead.
Authorities say the other two victims who were shot suffered minor injuries. Their names were not immediately released.
Team spokesman Jim Saccomano says he spoke with Broncos head coach Mike Shanahan and others in the organization after police told him of the incident.
"Complete shock. We're speechless. It takes words away. A terrible tragedy," Saccomano said.
Saccomano says police called him at around 3 a.m.
Prior to the shooting, Williams and Walker had attended an invitation-only New Year's Eve Party at a downtown restaurant which included some well-known Nuggets players, including Nuggets' forwards Kenyon Martin and Carmelo Anthony.
Authorities say they believe the shooting was a drive-by, and that the shooter or shooters did not know who was in the vehicle. Police say the shots were fired with a semi-automatic weapon.
Police say they are still searching for suspects and interviewing witnesses.
"We have no motive yet," Jackson said. "We're hoping to talk with witnesses to find out where they were coming from, and that might give us some clues."
Hours before the shooting, the Broncos lost to San Francisco 26-23 in overtime, eliminating them from the playoff race.
Williams played in the first half of the game but sat out the second half with a shoulder injury.
However, during the game he had a sack, a forced fumble, and led the team with seven sacks. He also returned two punts for 50 yards.
Williams, a second-round pick in the 2005 draft out of Oklahoma State, started nine games as a rookie due to injuries. This season, he took over as the starter for Lenny Walls alongside Champ Bailey, and had 88 tackles, 78 of them solo, and four interceptions.